SPH Reit Yield is Back

SPH Reit released their full year results yesterday and its DPU performance is BACK !

It announced a DPU of 1.58 cents for their last quarter before closing their book. This is a 14% increase from the DPU from the previous quarter. Their full year DPU also raised 98% year-on-year to 5.8 cents.

This translates to 5.8% yield which brings it back into the historical yield range of 5.0% to 6.2%. The fact that it is on the higher end of the range means that SPH Reit share price may actually have an “upgrade” in the coming days.

Say if its yield would to revert to the mean of 5.6%, SPH Reit share price will climb to 96 cents, 3 cents up from yesterday :-). I think it is a credible scenario.

I am vested in SPH Reit, having held it in my portfolio since its IPO in 2013.

There are some things that I like about SPH Reit (steady dividend is one) but also others that I don’t like. I think they can do better is to be more ambitious in their growth plan.

I used to have a much larger holding of SPH Reit but over the years, the Ascendas, the MapleTrees, the Capitalands overshadowed it with their more aggressive growth plans and attracted me to invest more of my money with them.

For years, SPH Reit only has The Paragon and Clementi Mall, really not much growth but it did deliver consistent dividends year in year out. Many of us waited for SPH to inject Seletar Mall into it till the cows come home but it never happened. I also do not know why SPH would want to hold on to it so tightly. Instead, SPH Reit has to venture all the way to Australia to buy retail malls to carve out a growth plan for itself.

Today, it is still a relatively modest and conservative reit. Its gearing is only 30%. So it has ample headroom for growth by acquisition if it wants. I am happy that it is now included in the FTSE EPRA Nareit Global Developed index. This new development should raise its visibility among investors outside Singapore. Hopefully, it would improve its trading liquidity and increase its valuation and i.e. share price.

I think the deal between SPH and Keppel will go through. They have already crossed the first hurdle.

I hope the “new” SPH Reit under the Keppel Group would be more active in pursuing growth.

I would continue to hold my current SPH Reit shares and hope to hear more good news from them.

Take care folks and have a great day.




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